Married womenâ€™s property act (MWP) â€“ Life insurance under MWP

Updated on
Oct 05,2018 - 06:42:42 AM

Married women’s property act (MWP): Have you ever wondered why an individual takes the insurance policy on his life? After all, it’s your family members and dependents who suffer the most on your demise. If you are the only bread winner in the family, life of your family gets very difficult on your unfortunate demise. Then comes the policy amount of your life insurance to rescue your family members and dependents. But what if you have a huge amount of loans and guarantees to be paid off? In such cases, creditors would go to the court to recover their debts even out of your policy amount leaving your spouse and children with no money. In such circumstances, married women property act helps your wife secure the policy amount if the policy is taken under Married women property (MWP) act. This post gives you the important insights about MWP.

What is Married women property (MWP) act?

Married women’s property (MWP) act was enacted during the British era to protect the rights of married women with respect to their property. As per this act, following are deemed to be the separate property of a married woman:

The wages and earnings of any married woman acquired or gained by her after the passing of this act, in any employment, occupation or trade carried on by her.

Any money or other property acquired by her through any literary, artistic or scientific skill

And all the savings from the investments of such wages, earnings and property.

Thus, the separate property of a married woman would get the legal protection by this act in the events of court attachments or any income tax attachments that the husband has run-up.

What are the life insurance policies under MWP act?

Under section 6, the MWP act has provided for “Insurance by husband for the benefit of wife”. The acts says

This essentially means that a life insurance policy taken by a husband on his life if effected under MWP act by expressing on the face of the policy for the benefit of his wife or wife and children, then the policy amount would never be available for discharging the creditors or any other liabilities of the husband. Under this act, even a married woman can take a policy on her life terming her children as the beneficiaries. Though the husband would not get anything from the policy, it will be considered as her separate property.

How it works?

Once a life insurance policy is taken under MWP act by the husband and all the premium dues are paid, then the policy becomes the trust property of the beneficiaries. Further, no changes can be made to the policy without the consent of beneficiaries. So, here comes the question of beneficiaries as to who can be termed so? Following could be named as beneficiaries of the policy under MWP act

Policy holder’s wife

Policy holder’s children

Policy holder’s wife and children together.

Thus, the policy becomes a trust once all the premiums are paid and the trust belongs to those who have been expressly named as beneficiaries in the policy. If the policy is of such, which gives an assured sum (surrender value) on its expiry (not on the death of the holder), then even the husband cannot claim anything from it. So, this makes it compulsory to name the beneficiaries while taking the policy itself. If the children who are named as beneficiaries are minors, then it is mandatory to name the trusties also.

How to buy a life insurance policy under MWP act?

At the time of taking the life insurance policy, one must enquire the insurance agents about policy under MWP act and can get it very easily just by filling an additional form “ addendum to the proposal form for policy under MPW”. And it is not possible to bring the existing policies under MPW act. So, one can only avail this at the time of taking the policy. Following is a sample addendum

What are the demerits of this policy?

One cannot use the policy taken under MWP act as a security to avail loan from bank or financial institution or any other lender.

The beneficiaries once listed in the addendum cannot be changed at any point of time later

The holder gets no control over the policy taken under MWP. It becomes a trust property once the premiums are paid by the holder.

No changes can be made to the policy without the consent of the beneficiaries

The policy cannot be assigned to any other person

Not many people are aware of the policy that can be taken under MWP. So, it is one of such unpopular policies in the market.